Conduct a financial evaluation of the initiative to match customers with product

Question

Conduct a financial evaluation of the initiative to match customers with products. This includes training sales associates and related technology investments. What is the net profit that Best Buy can expect from this initiative in Years 1 and 2? (Use the attached worksheet titled ‘Analysis question(4)’ to make the calculations wherever highlighted in yellow). Make the following assumptions for the computations:

Size of the salesforce – 30,000

Number of personnel to be trained each year – 15000 each in Year 1 and 2

Training cost per salesperson - $1500

Cost of mobile device per salesperson - $500

Best Buy revenues – $42.4 billion ($42,400,000,000)

In addition, to calculate the net profit for Year 1 and 2 separately, you will need the following information given in the case:

Sales increase 1% and 2% respectively in Years 1 and 2

Best Buy profit margin of 20%

Dat Revi Help Currency .. | EConditional Formatting 8 ..; | $ % , 1-Format as Table- Celks Boit Cell Styles board Font Alignment EF Number HSyles Y1 Yz Assumptions Size of salesforce Personnel to be trained Training cost/salesperson Cost of mobile device/salesperson Best Buy revenues 30,000 15,000 $1,500.00 $500 $42,400,000,000 15,000 -...:-… ! Revenues Y1 Y2 Sales increase (Galcolate) Best Buy profit margin (calculate) Y1 Y2 Costs Training costs Calculate) Cost of upgrading online system Cost of CMS Mobile devices (Calculate) Total costs (Calculate) RO1 - all stores /net profit (dalculate) $50,000,000 $12,000,000 $0 $12,000,000 A alysis arestion4)Analysis questian 4 Type here to search

Explanation / Answer

Assumptions Y1 Y2 Size of sales force 30000 Personnel to be trained 15000 15000 Training cost/Salesperson 1500 Cost of mobile device/Salesperson 500 Best buy revenue 42,40,00,00,000.00 Revenues Y1 Y2 Sales Increase 424000000 848000000 Nest buy profit margin 84800000 169600000 Costs Y1 Y2 Training costs 22500000 22500000 Cost of upgrading online system 50000000 0 Cost of CMS 12000000 12000000 Mobile devices 7500000 7500000 Total costs 92000000 42000000 ROI/Net profit -7200000 127600000

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